SEOUL (Bloomberg): Samsung Electronics Co. Vice Chairman Jay Y. Lee had his right to work at the company restored by South Korea, opening the way for him to formally take the helm of the country’s largest conglomerate roiled by global demand and supply shocks.
South Korean President Yoon Suk-Yeol on Friday (Aug 12) cleared the heir to the country’s biggest company of bribery charges, for which Lee spent 18 months in prison before his release on parole a year ago.
Samsung’s shares rose 1.3% in Seoul on the news.
The move comes as the global economy faces successive shocks from rising inflation, market disruption from the war in Ukraine and logistics snarls triggered by China’s Covid Zero lockdowns, raising the threat of uncertainty for export-oriented Korea. Rising geopolitical tensions between the US and China over chip technology also complicate long-term operation plans for Samsung, which runs major fabs in the two largest economies.
"In a bid to overcome the economic crisis by vitalising the economy, Samsung Electronics Vice Chairman Lee Jae-yong, whose suspended prison term was ended recently, will be reinstated,” the Korean government said in a joint statement from its ministries.
54-year-old Lee has been granted a special pardon effective as of Aug 15, the country’s independence anniversary. He had initially been sentenced to 30 months for alleged attempts to bribe a sitting president and win government support for his succession. The reinstatement will allow him to rejoin the board at the tech giant as well as travel overseas for deals.
"Samsung’s in a crisis as it has lost its two strengths: technology leadership and strict management,” said Park Ju-gun, head of corporate research at Leaders Index. "There’s an absence of a control tower making the right decisions at the right time to keep its leadership in the semiconductor industry.”
The pardon enables Lee to officially regain his leadership role. Under the conditions of his parole, he was prevented from taking up employment for a period of five years and has only been receiving reports from company executives without having a proper board title. Lee is widely expected to expedite major strategic decisions ranging from chipmaking deals to governance reforms.
Samsung, the world’s largest producer of memory chips, smartphones and mobile displays, warned during its earnings call last month that the war, inflation and waning consumer demand made it immensely challenging to forecast the year ahead.
One of the key outstanding questions around Lee is whether he’ll seek to take over as chairman of the tech giant.
Ever since Lee’s father, Lee Kun-hee, passed away in October 2020, the post to oversee the US$280 billion company has remained vacant.
Still, Lee’s legal woes will not be cleared for the next few years as he’s being separately prosecuted in relation to a merger of some Samsung subsidiaries and will be attending weekly hearings related to that case.